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If it's a retail site, high reversals may be common (shoe merchants, in particular). If you only have an option of a merchant with a reversal rate, just factor that in and re-estimate your actual commission percentage.

If someone returns something that has nothing to do with whether or not I made a sale.

Though I'm flexible on that view depending on what the item is.

Still (in a lot of cases) you've gained a new customer. They are probably on your mailing list. They'll come back to your site. And you get to use my work for free just because they returned something? You have no idea what expenses I incurred to get you that customer and I should be paid for it.

I don't like working for free so that is why I stick to merchants with a 0% reversal.

Some reversals are due to fraud or due to affiliates using restricted methods to drive sales. Viator has reversals due to 2 affiliates posting unauthorized coupons. Affiliates need to keep in mind that policing a program can create reversals and should be taking that into consideration when seeing a higher than zero reversal rate. You want us to police our programs right?

I'd say, it highly depends on the industry. As Joshua has pointed out, some retail merchants will always have a higher reversal rate than others (especially where there is sizing involved; read: shoes, apparel, etc). Another reason for high reversals could fraud, as loxly has mentioned. Merchants that pay for leads or sign-ups normally have a higher reversal rate than, say, a book merchant. So... To answer the question, I would say it'd be best to make a list of acceptable reversal rates by industry (e.g.: a 10% reversal rate would be extremely high for a personalized products merchant, but often quite acceptable for a shoes merchant's affiliate program).

Since I joined Shareasale few years ago, I only had reversals from one merchant, and since the only reason they always gave me for those reversals were "Duplicate Sales", and when I saw that those supposedly "Duplicate Sales" were just the merchant giving my already posted commission to someone else from another network... I decided to drop that merchant and delete the entire directory I was using for that merchant on my site.

Did I lost other potential sales from that merchant by dropping them? - Of course I did.

Did I had to deal with 100's of 404's pages because I deleted that directory, since I wasn't able to find a replacement? - Of course I did.

Do I have any regrets for dropping that merchant when I did? - Hell No!

Do I still work with merchants that are on more than one network? - Yes, why not? ..... But as soon as I get more than three reversals from any of them with the same excuse I mentioned above, they're out of my sites asap, because I don't work with those kind of merchants that will take my already posted commission, to give it to someone else on another network.

And btw, I also agree with Julian on this:

Originally Posted by Julian

A merchant with a reversal rate of 10% could convert better than a merchant with 0% reversals.

Or, if they have a high reversal rate and you can not determine the reason, run on a trial basis to start or do your own test sale.

This World is Not My HomeWe're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993

Reversal rates, like other statistics, vary by industry. Every industry has an average. A particular reversal rate may be high for one industry, average for another, and even low for another. In general, as Geno has said, retail merchants and especially those who sell clothig or oter items that require sizing tend to have a higher reversal rate.

Reversal rate spikes can also be triggerd by the cathing of unscupulous affiliates. You shoud do some resaerch and see how long this merchant has had a high reversal rate.

One last thing to consider is the merchant's reversal rate compared to its conversion rate. This is debateable, but if you do your math you may find that even though their revesal rate is slightly high you will still make out due to higher sales.

Now this is not to disregard reversal rates entirely; if you find a merchant that has had unusually high reversal rates for a long period of time, it is generally best to look for others.

I had a quick look at my merchants with EPC over $100 and thousand of sales. Only one (on a dozen) had a 7 day reversal at 5.19% and 30 day 1.60%. I know it's a spike and the AM is well known. All others have a steady 0%.
I agree, they are not selling shoes or don't have a high return rate. I know my merchants, they have no shady activities and I don't know them any shady affiliates, either. Maybe they are kicking them out before having problems. I'm pretty sure some are eating their returns or fraudulent transactions (it should be acceptable for a merchant if the % is really low)
A merchant has to clean their programs from time to time and I'm not going to worry if I see a peak of high reversal and if I understand why, even if it's well over 10%.